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Leasehold Extension Malaysia

What is leasehold property?

Leasehold is an ownership of a temporary right to hold land or property. Ownership returns to the state once the lease expired. The common period for leasehold property are 99 years or 60 years.

What is the difference between a leasehold and freehold property?

Freehold land is where the owner of the land has no time limit to his period of ownership. The owner of the land/property holds the ownership of the property forever.

Leasehold is an ownership of a temporary right to hold land or property. Ownership returns to the state government once the lease expired. The common period for leasehold property are 99 years or 60 years.

Why should I apply to extend my lease for leasehold properties?

  • When the lease is about to expired ( eg: less than 30 years left), then it’s extremely difficult for the owner to sell their property as the potential buyer is unable to secure a bank’s loan due to the lease.

  • The ownership of the properties is returned to the state government once the lease expired. So you basically lost the ownership of the property. The State government has the right to give/ sell the leasehold properties to any third party without your consent.

  • The market value of the leasehold properties with shorter lease is lower than those with longer lease.

Extension of Leasehold Land in Selangor & Kuala Lumpur

How much is the premium involved to extend my lease for leasehold properties in Selangor?

In Selangor:

As of the date of this article, owners who wish to apply for lease extension can choose to either:

  1. To pay a mere RM1000 for the extension of lease 
    This is provided that the owner does not sell the land to third party subsequently. Should the owner decide to dispose the property at a later date in the future, the owner shall pay the balance premium for the land valued at that time in the future according to the following formulae.

  2. To pay the full rate of premium for the lease extension. 
    For this option, the Selangor State Government is giving a 30% rebate on the rate of premium at of the date of this article. In Selangor, the formula for calculating the full rate premium for lease extension for residential property is:

     

    (1/4) X (1/100) x (Market Value of land) x (lease period – years remaining on the lease) x (land area)

    For Selangor, the formula for calculating the premium can be found in the Selangor Land Rules 2003 & Selangor Quarry Rules 2003

    For Kuala Lumpur, the premium for for calculating the premium for lease extension for residential property is:

    (1/4) x (category of land use) x (value of the land) x (1/99) x (term of new lease minus balance of the existing lease)

    For Kuala Lumpur, the formula for calculating the premium can be found in the Federal Territory of Kuala Lumpur Land Rules 1995

How do I renew my lease if my property is under strata titles?

For properties under strata titles such as condominiums and apartments, the application may be made by the management corporation on the authority of a unanimous resolution. This also means that the management corporation shall renew the lease of the master title as well as the strata title of the individual units at the same time.

How long does it take for me to complete the extension of lease?

The whole process may take approximately 1-2 years from the time of submission of the application until the issuance of the new title.

What are the documents required for leasehold extension applications?

The documents required are as follows:

  • All the prescribed forms required under the National Land Code and State Authorities prepared by your lawyer;

  • Original title of the property;

  • Copies of the latest quit rent and assessment receipts; and

  • Copy of the registered owner’s identity card

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